Seminole Rock Deference: Court Treatment of Agency Interpretation of Ambiguous Regulations

Summary

Agencies promulgate rules to implement statutorily authorized regulatory programs. These rules, although established by an administrative agency, maintain the force and effect of law. To be able to promulgate rules, an agency must be granted by Congress the power to do so, either explicitly or implicitly, through statute. To control the process by which agencies create these rules, Congress has enacted statutes, such as the Administrative Procedure Act (APA), that dictate what procedures an agency must follow to establish a final, legally binding rule.

Often, the organic statute that allows an agency to implement a program through rulemaking may be ambiguous. The agency must then interpret the ambiguous terms of the statute in order to establish the regulatory program. The Supreme Court, in Chevron U.S.A., Inc. v. Natural Resources Defense Council, established the Chevron test, which requires courts to defer to an agency’s interpretation of an ambiguous statute if the agency’s interpretation is reasonable. However, what happens if an agency’s regulation is ambiguous? The Supreme Court ruled in Bowles v. Seminole Rock & Sand Co., back in 1945, that a court must accept an agency’s interpretation of its own regulations unless it is “plainly erroneous.”

Since the Court handed down the Seminole Rock decision, the Court has outlined certain exceptions to the rule. Courts will not defer to an agency’s interpretation if the regulation itself is clear, if the agency suddenly changes its interpretation, or if the agency’s regulation merely “parrots” the statutory language. Finally, courts generally prevent agencies from levying punitive fines against regulated entities if the regulated party could not have reasonably known how the agency planned to interpret the regulation.

Agency regulations provide the backbone of a large number of federal programs. It is important to understand how courts treat an agency’s promulgated regulations in order to understand how a rule may be applied to the public and regulated entities. This report discusses how courts currently treat an agency’s interpretation of its own ambiguous regulations and discusses the arguments raised in the recent Supreme Court opinion from Decker v. Northwest Environmental Defense Center, in which some members of the Court indicated a willingness to reconsider Seminole Rock deference. The report also discusses the justifications for and arguments against maintaining this judicial deference.